How does your company react when targets aren’t met? That’s where you’ll find the organizational culture

In February this year, Rakuten People & Culture Lab advisor Ryuji Nakatake published Winning Culture: Creating People and Organizations with Winning Habits. “Winning Culture” is one of the Lab’s research themes and we have often discussed the common essence of winning teams around the world, including Spanish professional soccer club FC Barcelona.

But how do you create a strong organizational culture with a winning habit? Mr. Nakatake is currently publishing a series of articles entitled “Ryuji Nakatake’s Winning Culture” on Diamond Online. In this column, we present an article about clues to organizational culture.

When it comes to understanding organizational culture, there are some things to be aware of. Organizational culture is not an organization’s outcomes, results, or some other kind of event that appears on the surface. Facts like winning a game, increasing sales, or taking market share from a competitor are nothing more than phenomena.

What you need to focus on in understanding organizational culture is how the people in the organization react to such facts. At the same time, it’s important to identify the kind of emotions that are generated in the minds of each person in the organization. It is in aspects such as these that organizational culture emerges.

For example, let’s say there’s a company that commands the top share in its industry. Although the company has maintained the top spot for many years, the second-place company has closed the gap over the past few years. It is at times like this that the top company will reveal its true organizational culture in the way that it perceives its circumstances.

Do they think: “We’ve led the market for a long time, so it doesn’t really matter if they catch up to us a little”? Or do they become anxious, thinking: “We can’t stand it that the No. 2 company has closed in on us like this”?

There is only one reality. But how a company reacts to that reality differs depending on the company.

The first reaction places importance on the fact that the company is currently the market leader. The second reaction is conscious of the fact that the company is on the top but about to be overtaken by the second-place company. Whereas the organizational culture represented by the former considers it okay to be on top, the latter culture only permits this status if the company commands the overwhelming top share.

For Waseda University’s Rugby Football Club, of which I have been captain and coach, the team shared the belief that “if you can’t win the championship title, then you lose.” No matter how well we may fight, or how many second-place finishes we may record, if we aren’t the best in Japan, then it means nothing. Such was the team’s organizational culture.

What type of circumstances elicit a sharp response? This represents a typical case in which the organizational culture emerges.

Even more than market share, organizational culture surfaces with greater prominence in response to targets.

Many companies plan their monthly targets based on a breakdown of annual sales and profit goals.

In some companies, if your results should fall short of the monthly targets, then you can expect to receive significant pressure from your boss. The same gloomy mood that you experience will also be suffered by your colleagues and missing targets becomes an unbearable ordeal. This can be attributed to a shared sense of value at the company’s foundation that makes clear the message: Failure to meet your targets is unacceptable.

On the other hand, there are also companies in which almost no pressure is felt when it comes to meeting targets. They may cite such factors as the impact of the new coronavirus or the shrinking of the industry overall. Or, these companies may value the process over the results, regarding results as more of a matter of luck. This is organizational culture.

What’s important is to understand that there are no “right” or “wrong” reactions. Rather, organizational culture is an organization’s inherent likes and dislikes and the things it is particular about.

This article is an English translation of an article from the serialized DIAMOND Online series Ryuji Nakatake’s Winning Culture, printed with permission by DIAMOND, Inc.
The original article (in Japanese) can be viewed here.